In today’s market, every business needs greater transparency to meet consumer and industry demands. But supply chain transparency is an ambitious endeavor that is not “one size fits all.” The way a company approaches achieving greater visibility can differ depending on resources, corporate priorities, supply chain size, desired outcomes, and more.
We know that transparency is worth pursuing. Multiple studies show that businesses who invest in supply chain transparency and sustainability build consumer trust and attract additional business. But the way they choose to interpret and incorporate this into their operations can, and should, vary. Here we take a look at 3 different approaches to achieving supply chain transparency.
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Address immediate suppliers
This approach focuses on breadth, not depth. In many cases, immediate Tier 1 suppliers provide a very high percentage of a business’ total goods, making this a great place to start for achieving greater transparency. The focus is on ensuring compliance among the Tier 1 and possibly Tier 2 suppliers to form a solid foundational level of supply chain knowledge and compliance: Who are my suppliers? Where are they located? What certifications do they have? Do they comply with my company’s standards for sustainability and social responsibility? Achieving transparency among immediate suppliers provides businesses with a “quick win” and is a good phase 1 in the supply chain transparency journey.
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Map critical commodities
This approach focuses on mapping critical commodities and identifying potential risks. The idea is not to limit mapping to the first or second tier, but to map a critical commodity as far as possible—ideally down to the farm, plantation, etc.—to assess risks that may impact the supply chain.
Critical commodities are those that form a core part of the business and are associated with risk, whether related to the environment, human rights, food safety. For example, cotton is a major commodity in the apparel industry, but it is often linked to unsustainable practices and even human rights violations. Businesses producing electronics or jewelry may want to address conflict minerals, while others may want to ensure their palm oil is not associated with deforestation or unsustainable or uncertified suppliers. By focusing on commodities central to the business, companies can ensure their investments in supply chain transparency are well-placed.
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Tackle a single product
The third approach involves tackling a single product or product line. This is often done with a marketing campaign in mind, where the results will be shared with consumers to promote the product’s transparent and responsible origins. The choice of product or product line can be informed in several ways. Businesses can choose to start with the supply chains they already have the most information on – for example, if they have mapped their Tier 1 and possibly Tier 2 suppliers, they may already possess 80% of the information they need to fully map the supply chain for a certain product.
Another method is selecting the product or product line a business is most known for or wants to promote. For example, a fashion company known for its “fast fashion” approach may want to develop and promote a sustainable “green” brand line. A food company associated with “healthy” and “natural” food may want to increase transparency into their organic product line to further appeal to their consumers. The product choice may vary, but the result is the same: increased supply chain visibility and consumer awareness.
There is no right way to be transparent. Supply chain transparency can be tailored to fit a business’ needs in a way that both sets them up for long-term success (increased consumer loyalty and trust), while providing returns in the near future (reduced risk, supporting marketing campaigns). For any approach, businesses can increase their bottom line and demonstrate their willingness to discover, improve, and share their supply chains.
